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General Purpose Technologies and their Implications for International Trade

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  • Petsas, Iordanis

Abstract

General purpose technologies (GPTs) are drastic innovations, such as electrification, the transistor, and the Internet, that are characterized by the pervasiveness in use, innovational complementarities, and technological dynamism. The model develops a two-country (Home and Foreign) dynamic general equilibrium framework and incorporates general purpose technology diffusion within Home that exhibits endogenous Schumpeterian growth. The model studies the effects of the diffusion of the general purpose technology on the pattern of trade and Home’s relative wage. Based on specific assumptions, the adoption of a GPT by a particular industry generates an increase in the productivity of manufacturing workers at Home. By assumption, the diffusion of a GPT across industries is governed by S-curve dynamics, and the diffusion of the GPT within an industry at Home is considered exogenous. The model analyzes the long-run and transitional dynamic effects of a new GPT on the pattern of trade and relative wage between the two countries.

Suggested Citation

  • Petsas, Iordanis, 2009. "General Purpose Technologies and their Implications for International Trade," MPRA Paper 14446, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:14446
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    General purpose technologies; Schumpeterian growth; comparative advantage; scale effects; R&D races;
    All these keywords.

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • F10 - International Economics - - Trade - - - General
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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